With the first Hyundai Tucson Fuel Cell Vehicle deliveries happening soon (a bit later than expected), it's time for the Korean automaker to explain why it's offering the H2 CUV here in the states. After all, there are only 10 public hydrogen stations in the US today, according to the DOE, so it can't be to take over the market. According to a Hyundai exec, the reason we are getting the Tucson Fuel Cell is to make up to $130,000 through California's ZEV credit system.

"We really don't make any money out of selling the fuel cell vehicles for now" – Byung Ki Ahn

According to Wards Auto, the California Air Resources Board (CARB) will give the automaker up to 26 points worth of zero emission vehicle (ZEV) credits for each of the $499/month hydrogen Tucson leased through the 2017 model year. Those credits could be worth up to $130,000 to Hyundai. Byung Ki Ahn, Hyundai's director of the fuel cell group, told Wards Auto that, "We really don't make any money out of selling the fuel cell vehicles for now. ... So just by selling the fuel cell (vehicle) we could get a lot of credit points, which you could sell at a later time if you want, like Tesla does. It could be a good business model."

Ahn clarified that Hyundai does not plan to cash in on those credits, but to use them to offset the rest of its vehicle lineup. Other automakers also participate in the ZEV credit system, of course, but if Anh's numbers are correct, then fuel cell vehicles earn more credits than battery electric vehicles do, so if you want to earn a lot of credits, hydrogen is a good way to go. You can find more details over at Wards Auto.

*This post has been updated to mention other automakers using the ZEV scheme.

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This chart (page 14) shows that an FCV (classified as a Type V ZEV) earns 7-9 credits, depending on the year it is put on the road... The 26 credits has to be a mistake. A Tesla Model S (Type III) gets 4 credits. http://www.arb.ca.gov/msprog/zevprog/zevregs/1962.1_Clean.pdf Likewise, the $130k figure per FCV makes no sense at all, considering that there is no set price for the credits. As I wrote below, if Tesla earns $6,250-ish per credit, then the Hyundais would be valued in the $46-57k range per vehicle. Again, some explanation of where the "26 points" and "$130k" figures mentioned in the article demand explanation, because they make no sense based on the CARB ZEV credit system we are all more or less familiar with.

I don't know where Wards Auto got the 26 either. But now I am worried that it is not a mistake.. but rather some hidden sub-section of the CARB ZEV rules that allows stacking of credits from different sources. They have had "multipliers" for MYs before 2011. You need to find a lawyer to comb through all those rules... I would not put it past Lobbyist to sneak in something special for FCVs that would allow "ludicrous speed" credits.

@LTW - The links below will take you to the most recent revisions of the regulations (which include fast refueling requirements not reflected in the 1962.1 document yet). If there was a recent amendment that supported Wards' assertions, it would've been here, and I don't see it: (reviewed June 2nd, 2014) http://www.arb.ca.gov/regact/2013/zev2013/zev2013.htm (amended May 30th, 2014) http://www.arb.ca.gov/regact/2013/zev2013/zevfro.pdf

Considering the limited utility of H2 cars given the minuscule infrastructure, should a H2 car, limited to driving at best to SoCal, be given substantially more credits than a Tesla Model S 85kWh, which can travel border to border and coast to coast, with a refuel session shorter than most people take to eat? CARB needs to update the rules to reflect true utility of the ZEV vehicles, and avoid handing out boondoggles.

How many of these vehicles are going to be garage queens? As pointed out in the article the infrastructure is severely lacking. I for one don't want to pay for its construction. The only thing making HFC vehicles look financially good now is heavy subsidies from both government and oil industries. If drivers were paying the real price for the fuel and vehicles HFC would be a dead end.

ZEV credits have no inherent value. They only gain value if they can be sold. However, other automakers are less and less needful of buying the credits, therefore making them worthless... Otherwise, Tesla would still be reporting income from selling them. Automakers need the credits to fulfill the requirements of their own fleets, which is exactly what this article states Hyundai plans to do.

Wow, it's nice to hear a big corp come out and be honest about the situation. I couldn't think of any other reason to build these cars. The market demand is not there and the price is too high. This is just like the EV compliance cars - automakers build these things just to play our government's silly games. Meanwhile gasoline continues to be subsidized in many ways and the price is artificially low, which hurts adoption of alternatives and externalizes costs onto everyone.. Ah well.. what's new.. our government is incompetent and corporations game it..

$4 per kg would work where I live. The Toyota fuel cell sedan is likely to get an EPA rating of 70 miles per kg (judging by the larger, older tech FCX clarity getting 60). $4 per kg means 400/70 = 5.7 cents per mile. Where I live, Rhode Island, electricity is 15 cents per kwh. The Nissan leaf is rated at 3.33 miles per kwh. That's 4.5 cents per mile. The Nissan Leaf will only save you $12 per month in fuel. (And that's ignoring the cost of installing a charging station, smart meter, etc) So, the real question would be - can you build a battery electric car with a 300 mile range and sell / lease it for only $12 per month more than the Toyota fuel cell will sell / lease for?

With there being only 11 public Hydrogen fillings stations nationwide, the chances you have a hydrogen station near you is approximately zero if you don't live near Los Angeles. A 300 mile range is pointless if the nearest station is 900 miles away. South Carolina is your nearest Hydrogen fueling station: http://www.afdc.energy.gov/fuels/hydrogen_locations.html So how again would Hydrogen work for you?

Not at all irrelevant... If the barrier to initial adoption is so high... no automaker COULD ramp up to "sell in volume". Automakers will perpetually be stuck leasing/selling FCVs at super-low (3-digit) volume in only the Los Angeles area.

A clarification of the CARB credit/ point issue is certainly in order. The figure seems extravagantly high, considering Tesla only gets $25-35k per Model S. Aside from that, the Hyundai business plan regarding FCVs seems very well thought out.

"$25-35k per Model S" That's 5-7 credits ($5k each), which is the level before CARB made amendments to how they count the "fast refueling" requirement (basically battery swap doesn't count). If the proposed changes make it through, the Model S would be worth 3 credits like all other EVs. CARB also pushed through a change such that the top tier get 9 credits. Pretty much every FCV will be in the top tier. So an FCV maker would have to build 1/3 the vehicles to get the same amount of credits, which is already a huge advantage. If it's 26 credits, it would be 1/8.6, which is utterly ridiculous.

Actually, you are thinking ZEV type III... which is 4 credits. Both the S60 and S85 have greater than 200 miles on UDDS (LA-4) cycle... which would be enough for Type IV (if could recharge under 15 min). But without any timed requirement, 200 miles is good enough for Type III... or 4 credits. In MY2018... it should all be equalized down to 3 credits. But I know that Hydrogen Lobbyists will attempt to extend that in 2017

Yep, CARB certainly set up a situation where the squeaky mouse gets the ZEV credits. Whether by engineering their cars to have swappable batteries, or by ignoring the development of EVs altogether in favor of a developing a compliance vehicle that people want even less, just to double or triple (in this case 6 - 8 times) the ZEV credits. CARB wields ungodly power to influence... and they take that power away from consumers by removing the "demand factor" and telling automakers directly that they prefer Hydrogen over Batteries.

The Model S is stil worth more than other EVs because it has 200+ mile range. Even the 60kWH model does. The 40kWh one didn't, but you're supposed to pretend that Tesla cancelled that one because of lack of demand, not because of any other reasons like they'd lose more money on it due to different credits earned.

I believe the credit difference between this and the Model S is because CARB set up a stacked deck thanks to the Fuel Cell lobby and the large number of CARB board members who come from the H2 side of the world (That was simply a fact last time I checked the Boards make up). So they classified the Model S as something below the FCVs because it couldn't fill up in less than 10 minutes. They conveniently decided that it was either 10 minutes or it was worth nothing compared with an FCV. Not that 15 minutes was worth slightly less, or 20 minutes was worth slightly less again. Either it could do 10 minutes flat (as some magic number they pulled out of their A$$) or it would have to be a much lower tier for credits. THIS is the reason I hate FCVs and pound them every chance I get. If they just want to compete on a level playing field, then go for it. But they learned too many dirty tricks from their friends in the oil and gas industry about how to screw everyone else....not do content to compete themselves.

@Letstakeawalk I don't agree with the flex fuel analogy. No matter if the car is doing "fast fuel" or not, it's using electricity. "fast fueling" has nothing to do with the type of fuel being used. And the criteria to prove that they have to do it all the time is obviously not going to work, given EVs have the option of filling up at home (an option that most people use). It's basically penalizing EVs for having a more convenience filling option. @Rotation The current proposal (which was updated just late last month, linked by Nick up thread) of basing it on number of swap events seems fair. However, the previous one reported by ABG wasn't (it was based on portion of miles covered by battery swapping). That one would have ensured Tesla gets almost no credits. However, I still don't really agree with the spirit of the fast fuel requirement as currently designed. Right now it does not really account for whether such fast fueling actually allows farther trips. The plan for hydrogen stations right now are clusters for local use, meaning they will operate no different than EVs (Teslas with superchargers excepted). The fast fuel requirement should be tied to having stations that actually enable longer trips outside of local use. The superchargers don't match the fast fuel criteria, but they actually enable much longer trips than the hydrogen stations do now. I'm glad this bonus will end in 2018 (although like Joe says, likely will be extended).

It is perfectly valid to get upset "the number of credits any one individual earns"... and even "hate". This is taxpayer money that is going to an expensive infrastructure for fewer and fewer vehicles. It is one thing to give even credits to all ZEVs, (because cleaner air is CARBs mandate)... it is VERY different award a particular technology a distinct advantage which require more money be spent on Infrastructure to support. Automakers are NOT paying for H2 stations. Even the H2 providers, are only paying a small fraction of the cost. Taxpayers are footing the bill. And it is because Hydrogen Lobbyists can keep claiming that FCVs "are the future".. and that "automakers are eager". They keep public money rolling in. But the reality, is that the real demand is NOT there. It is artificial. And giving automakers "5 times" more incentive to develop FCVs... keeps this nonsense going.

The problem with the battery swap was that in order to earn the full Type V credits, Tesla would have to prove that their customers used the battery swap *all the time*. Tesla knew that was impossible; having the option of less than 15 minute refueling is quite different than having typical refueling times of less than 15 minutes. It's a similar issue with the "Flex-fuel" cheat - we know almost nobody refuels their big SUVs with E85, and that makes of mockery of the designation.

Joe has nailed it with that last comment. He is showing just how pathetically biased CARB is: They ignore the fact that over 100,000 Americans are driving EVs and just fine with charging them at home. The goal is supposedly to get as many Zero Emission Vehicles on the road as possible. They are showing that their goal is to get HFCVs on the road. If they really believe their goal is simply ZEVs, then treat them the same and let buyers vote with their dollars. Otherwise they need to come out of the closet as the H2 lobby they are.

Rotation, LTAW... no, I do not agree that Tesla should get extra credit for swap schemes. I just thought it was a good show, to see how CARB is so in bed with FCVs that they didn't see Tesla coming. I don't think ANY extra credit should be awarded based on "fast refuel" at all. It assigns an ASSUMED preference for one type of fueling over another. It presumes to tell the people that, because we are used to centralized fueling schemes... that is what we want. But WHERE is the extra credit for Home Refueling??? Hydrogen Lobbyists have done a good job convincing CARB that Central Fueling is in demand. But Tesla is proving that it isn't the only way that appeals to drivers. Bottom line, CARB should not be assuming customers want one particular thing or another. That is what "credits PER VEHICLE SOLD" is supposed to be for... automakers should get more credits by selling more vehicles. Period.

Joeviocoe: CARB changed the rules so that Tesla will get credits for swapping in proportion to the number of customers that use swapping. Seems fair, right? Before, they just had to show it could be done. Even if 90% of their cars were too far from the swapper to use it, and it was too expensive and thus no one used it, they'd get more credits. That's not right, it isn't right to give out credits for a function that doesn't add any value for customers because it isn't used or available to them. And Letstakeawalk, I'm really glad the Flex fuel cheat was also fixed.

Worth nothing? Tesla gets 4 credits per car sold. This would be at most 8 on the same scale. I don't get how they got to 26. Tesla wan't as close as you think to making the fast refueling cutoff. They weren't 5 minutes off, they were an hour off. The spec is to full to 95% of full range in 15. Tesla takes an hour or more for this due to how batteries flatten off at the top.

"THIS is the reason I hate FCVs and pound them every chance I get." I'm very sorry to read that your emotions are so tied up in this. FCVs and BEVs are both very positive steps forward away from the ICE. We need a variety of solutions that address all aspects of transportation, and getting angry at any one particular technology that works is truly a waste. My point is the disparity the article presents. I thought (as did most) that an FCV got 7 credits, while a Tesla got 5. The jump of those last two credits from a value of $25-35k to $130k is unbelievable, considering the fungible nature of the credits. Each credit should be worth the same as any other credit, so if a Model S is worth max $35k, then the FCV should be worth just $49k, having earned only two more credits. More easily presented, if a Tesla is worth 5, and a Hyundai FCV is worth 7, then Hyundai would have to make 5 FCVs to match the number of credits earned by Tesla for selling 7 cars. Since Tesla has sold more than 25k Model S, Hyundai would have to sell nearly 18,000 FCVs to earn the same number of credits. That's why it's pointless to get upset an the number of credits any one individual earns - it's the total amount of credits earned from a whole production run that actually counts, and Tesla is still going to earn way more credits selling their BEV than any automaker will earn with their FCVs.

Thanks. Well, $78,000 for a sedan in Japan, and Hyundai's Tucson (an SUV) for $144,000 in Korea. Even worse than my "naysaying" predictions. And those prices are for domestic sales, which are often much less than exporting to the US. http://www.globalpost.com/dispatch/news/yonhap-news-agency/140417/hyundai-motor-aims-sell-more-10000-fuel-cell-cars-s-korea--0 This is going to be a s!tstorm when people find out how many millions of dollars were spent in California on infrastructure, so a very few people in LA can refuel their expensive cars. It will make $7500 per vehicle seem like a pittance.

Anonymous

9 Months Ago

By your same logic, Tesla allowed Ford and GM to sell more dirty cars and the Nissan LEAF allows Nissan to sell more dirty cars as well. If you believe these policies produce more dirty cars, then blame ARB.

I don't buy this arguement, that "allows x automaker to make y more dirty cars." It ignores the fact that they were going to produce those cars anyway. If there were ZERO CARB regulations.... then automakers would be making whatever the hell they wanted. And likely, none would be ZEVs... and all would be gasoline/diesel. It is not like they can sell MORE than the demand for their cars allow.

Yes, you can think about it this way, but the problem is that if this 26 credit claim is true, this allows 26/3 = 8.6x the amount of dirty cars as the Leaf, and 26/4 = 6.5x the amount of dirty cars as the Model S, and the FCV certainly does not offset anywhere near the same amount of pollution as that proportion.